Time to read : 3 Minutes
Australians are facing significant financial challenges amidst the current inflation crisis, resulting in psychological distress and a lack of confidence in the direction of the country.
According to research from The Australian National University (ANU), a growing number of Australians are finding it difficult to meet their financial needs, with 30.3% of respondents saying they find it "difficult" or "very difficult" to live on their current income.
The proportion of Australians struggling to make ends meet on their current income has increased compared to the low point of the pandemic (17.3% in November 2020) and the pre-pandemic baseline (26.7% in February 2020).
"These findings depict a challenging economic landscape in Australia, which has been battered by the pandemic and an inflation crisis in recent years," says Professor Nicholas Biddle, author and Associate Director of the ANU Centre for Social Research and Methods.
"While, by some measures, Australia has fared better than other countries during these trying times, our results show that a significant portion of the population is facing considerable difficulties."
Certain groups have been disproportionately affected by the inflation crisis. Females, Aboriginal and Torres Strait Islander Australians, individuals with low education levels, and those residing in disadvantaged areas have faced increased financial stress during the period of inflation compared to the pandemic years.
Who's faring worst?
Different age cohorts have also experienced varying levels of financial stress, with individuals aged 35 to 54 reporting the highest rate of financial strain.
The proportion of under 35s facing financial difficulties comes in second, while individuals over 75 tend to experience the least financial stress.
Renters face higher financial stress, with 15.7% finding it very difficult to manage on their current income compared to 8.9% of mortgage holders and 4.9% of homeowners without a mortgage.
However, mortgage holders have been hit hardest by the inflation crisis, and the gap between them and renters has narrowed but has widened with outright homeowners.
The gloomy economic climate has repercussions not only on people's financial situation but also on their overall wellbeing and decision-making.
Australians have postponed significant purchases, fallen behind on bills, reduced spending on groceries and essential items, and taken other measures to manage their household finances in the last year preceding the survey.
There has also been a slight increase in early superannuation withdrawals, with 7.2% of respondents accessing their super prior to the eligible age, up from 5.9% in January 2023.
Australians' mental health is taking a battering
The ANUpoll shows a significant increase in psychological distress, reaching levels not observed since the outbreak of the Delta variant of COVID-19 when the country was under lockdown.
Distress levels remain significantly higher than pre-pandemic levels. Satisfaction with the nation's direction has also decreased, with less than two-thirds of respondents expressing confidence in the country's current trajectory.
The findings from the latest ANUpoll serve as a stark reminder of the financial difficulties faced by many Australians during the inflation crisis.
The significant impact on both finances and mental wellbeing emphasises the urgency for effective support measures and policies to alleviate the burdens faced by individuals and families across the country.
The Bottom Line
There are a few financial and psychological wellbeing checks you can put in place to help. We suggest you:
reach out to friends, family, or support groups to share your feelings and concerns. Talking about your struggles can help alleviate the emotional burden.
consider consulting a mental health professional, such as a psychologist or counsellor, who can provide guidance and coping strategies tailored to your situation.
create a realistic budget and financial plan to regain a sense of control. Consult a financial advisor or use online resources to manage your finances and explore options for relief or assistance.
prioritise self-care activities such as exercise, meditation, hobbies, and spending time in nature. These practices can help reduce stress and improve your overall wellbeing.
research and access local community resources, charities, or government programs that offer financial aid, food assistance, and other forms of support during difficult times.
Go deeper: Lenders need to do more to help people facing financial hardship: ASIC
Financial disclaimer
The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions. Any opinions expressed within an article are those of the author and do not specifically reflect the views of Compare Club Australia Pty Ltd.
